Implementing Six Sigma for Improving Business Processes at an Automotive Bank Florian Johannsen, Susanne Leist, and Gregor Zellner
Abstract Today, in the eyes of both customers and suppliers, product-related financial services take an eminent position. This does also apply to the automotive industry and its financial service providers (e.g., automotive banks). As a consequence, quality management and especially business process improvement methods (e.g. Six Sigma) attract growing attention in (the field of) financial services. Above all, the Six Sigma approach is being increasingly discussed in both literature and practice. This chapter is the result of the prototypical implementation of Six Sigma at an automotive bank; the focus is on the selection and the combination of quality techniques used at an automotive bank, the crucial points of the successful implementation.
1 Introduction Over the last couple of years, financial services have increasingly been growing in importance. In the automotive industry, too, synergies between new car sales and financial products have been systematically exploited and advanced. Apart from increasing sales numbers, customer loyalty is in focus. Besides, product supporting financial services are more and more used to differentiate and strengthen the own position in the market. At the same time, a change of values on the part of the customers has been taking place, causing more severe customer service pressures than ever for the organizations (Smith et al. 1999). Evidently, the probability of customer desertions due to poor service is often rated higher than desertions due to defects in a physical product. Thus, quality management, which some years ago was still regarded as solely referring to manufacturing industries, does now take an F. Johannsen (*) Department of Management Information Systems, University of Regensburg, Regensburg, Germany e-mail:
[email protected]
J. vom Brocke and M. Rosemann (eds.), Handbook on Business Process Management 1, International Handbooks on Information Systems, DOI 10.1007/978-3-642-00416-2_17, # Springer-Verlag Berlin Heidelberg 2010
361
362
F. Johannsen et al.
eminent position in financial services, too. Many different approaches such as, for instance, KAIZEN, EFQM (European Foundation for Quality Management), or TQM (Total Quality Management) were developed. Especially for the finance industry, Six Sigma (see Sect. 2.1) has been paid considerable attention, both in literature and practice. Six Sigma is a specific concept because it combines different parts and techniques of the mentioned approaches (e.g., the Six Sigma cycle (DMAIC (Define, Measure, Analyze, Improve, Control)) and incorporates the main steps of the PDCA (Plan, Do, Check, Act) cycle of KAIZEN). A central problem, however, is the selection of adequate quality techniques in a project (Arneson et al. 1996; also Conger 2010). There are numerous criteria and individual approaches, but generally accepted guidelines do not exist, even though the application of appropriate techniques is a critical-to-success factor when implementing improvement measures: they have significant influence on whether the results originally intended are obtained or whether resources are wasted on suboptimal approaches (Okes 2002; Pande et al. 2000; Bunney and Dale 1997). Other difficulties (e.g., lack of valid data, ambiguous customer requirements, etc.) often occur only when applying the Six Sigma cycle (DMAIC) during an improvement project (Antony 2006). These difficulties are, therefore, not included in this investigation. We aim at identifying an approach for the selection and subsequent combination of quality techniques within a Six Sigma initiative. Furthermore, results and experiences from the practical application at an automotive bank will be described. This article contains the following sections: in Sect. 2, the basic principles of Six Sigma (definition, Six Sigma cycle) are explained; they define essential concepts (quality techniques and tools) and describe the lack of support to select quality techniques in Six Sigma. Section 3 concentrates on how to select and integrate quality techniques and presents the development of a 3-step approach. In Sect. 4, we refer to the enterprise-specific application of this approach as well as the practical implementation at an automotive bank. In the last section, the approach and results are discussed.
2 Six Sigma Quality Management and Quality Techniques 2.1
Six Sigma Basics
Quality management is not really a new issue in manufacturing. In the late nineteenth century, the inspection of finished goods was introduced by F.W. Taylor, and during the last half-century, the concept of quality changed from a pure product specification toward a method and evolved by contributions made by quality leaders like Crosby (1979), Deming (1982), Ishikawa (1985), Juran (1988), and Feigenbaum (1991). But after several decades of literature, quality management still does not have an accepted or agreed definition (Foley 2004). Following the ISO
Implementing Six Sigma for Improving Business Processes at an Automotive Bank
363
9000:2005 definition, quality management includes all the activities that organizations use to direct, control, and coordinate quality. These activities include formulating a quality policy, setting quality objectives, planning quality, controlling quality, assuring quality, and improving quality. The Six Sigma method has been influenced by previous quality management work and industrial engineering approaches and now comprises a well-defined set of techniques and methods that support each of the five phases of a process lifecycle (i.e., DMAIC) (Harry and Schroeder 2006; Conger 2010). In the context of quality management, the term “Six Sigma” refers to a method that aims at significantly increasing the value of the enterprise as well as the customer satisfaction. The parameter “Six Sigma” is taken from statistics indicating the “sixfold standard deviation”. The standard deviation (s) shows the deviation (rate of defects) from the statistical mean. Based on a standard deviation of 6s, 99.99985% of all outcomes would be produced within acceptable limits. That equals 1.5 defect parts at a production of 1 million parts (Breyfogle 2003). As especially in financial services the output permanently fluctuates, a correction of 1.5s is common sense (Breyfogle 2003). That means that a 6s-level in the long run is equal to 4.5s, which results in a 99.99966% quality level or 3.4 defects per 1 million opportunities (DPMO) (Pande et al. 2000). Even though, for a couple of years now, Six Sigma has been applied in enterprises, the concept of the approach is not entirely confirmed. This fact is mirrored in numerous attempts at defining Six Sigma, which have to be investigated against the background of the individual application (Magnusson et al. 2004). In this context, the application as an enterprise-wide strategy (a management-driven top-down approach) (Harry and Schroeder 2000) as well as the implementation as an improvement method or purely as a set of techniques (Breyfogle et al. 2001) can be differentiated. In most of the cases, Six Sigma (as in this chapter) is interpreted as an improvement method (Magnusson et al. 2004); here, a business process is systematically optimized by means of the DMAIC-cycle (Antony 2006). In each phase, specific results are worked out (see Table 1) using widely established techniques (Pande et al. 2000).
Table 1 Results of Six Sigma phases Phase Results Define Description of project/problem, identification of customer requirements (Voice of customer), customer-critical characteristics (critical to quality (CTQ)), businesscritical characteristics (critical to business (CTB)), specification of performance standard. Measure Selection of values (process output, process input), data collection, data visualization, determination of current process performance. Analyze Data analysis, statistical determination of causes for the problems (correlations). Improve Generation of improvements, prioritization of solutions, and estimation of potential benefits Control Control of process performance, action plan for deviations.
364
F. Johannsen et al.
As an improvement method, Six Sigma seeks to identify and eliminate defects, mistakes, or failures in business processes and therefore combines human elements (e.g., culture change) of improvement and process management (Snee 2004; Antony 2006) (Baumoel 2010; vom Brocke et al. 2010). The Six Sigma cycle (DMAIC) supports process lifecycle management in a structured way using a well-defined set of techniques and methods.
2.2
Definition of Concepts
Both in practice and literature, there are different notions of the concept of “quality technique” (Theden 1996). Apart from that, there are ambiguities as regards the definition of “quality tools” (Antony 2006). It therefore seems to be helpful to look for consistent definitions of the concepts of “technique” and “tool” in the context of quality management. Quality technique is understood as an instrument, which, on the basis of guidelines and by means of several quality tools, leads to one or more results on different conceptual levels. As an element of a method, techniques determine what is perceived and help to generate results during each phase of the method (Leist and Zellner 2006). A technique consists of certain steps that are performed in a defined order (Hellsten and Klefsjo¨ 2000), for instance QFD, SPC, DOE, or FMEA. A quality tool is a means, which in a goal-oriented manner works out a result or supports the process of working out a result. The quality tool is set apart from the techniques by means of a limited application context with a clearly defined role (McQuater et al. 1995). Examples are cause–effect diagrams, histograms, or flow diagrams. Quality tools can occur independently or as an integral part of a technique (e.g., the House of Quality within the framework of QFD Akao 1990). Since tools could be part of a technique, the selection or integration of tools and techniques must focus both. But for selection and integration, the distinction (e.g., whether an instrument obtains only one or more results) is not relevant. Therefore, we use the notion technique only.
2.3
Related Work
Even though Six Sigma as well as most of the quality management approaches have a manufacturing background, the concept, originally inspired by the results achieved at enterprises such as Motorola (Pande et al. 2000), General Electric (Snee and Hoerl 2003), or Polaroid (Harry and Schroeder 2000), was more and more applied to service industries. This fact is mirrored in the growing number of publications that explicitly deal with the topic of Six Sigma in services. Breyfogle et al. (2001) and Hensley and Dobie (2005) published Six Sigma procedures for service processes, in a rather general way. In an empirical study, Antony (2004) investigates the application of Six Sigma at British service enterprises and identifies, e.g., success factors as well as the most frequently used quality techniques.
Implementing Six Sigma for Improving Business Processes at an Automotive Bank
365
The works published by Pande et al. (2000), Harry and Schroeder (2000), or Magnusson et al. (2004) describe Six Sigma more from an industrial perspective, but emphasize fundamental differences for the service sector. Despite these numerous publications on Six Sigma, there is an obvious lack of works dealing explicitly with the selection and integration of adequate quality techniques for a successful implementation of Six Sigma (Kwok and Tummala 1998). In literature, there is consensus concerning the steps to be followed in a Six Sigma initiative. In addition, the results to be achieved in each Six Sigma phase are described unambiguously. But it is also recognized that processes in the manufacturing industry differ from those in the service industry (Hensley and Dobie 2005). The lack of measurement systems for service processes for example is just one of several challenges Six Sigma initiatives face in the service industry (Chakrabarty and Tan 2007; Antony 2006). Therefore, many quality techniques cannot be used for production and service processes in the same way. Due to the difficulties in gathering data for service processes, techniques such as, for instance, Design of Experiments are quite uncommon in the service industry and are usually not used within Six Sigma initiatives. But also within enterprises, the project environment (regarding process documentation, customer interaction, or performance measurement for instance) may differ drastically favoring or opposing the use of certain quality techniques. Therefore, the selection of techniques has to be dealt with great care when starting a Six Sigma initiative. The missing standardization of Six Sigma (Harmon 2007) concerning the use of quality techniques makes their selection a central issue when implementing the concept in a certain company.
3 Development of the Approach for Selecting and Integrating Quality Techniques In literature, it is often pointed out that Six Sigma combines or integrates established quality management methods and techniques (Pande et al. 2000). The choice among the many different quality techniques of Six Sigma raises the question of the specific characteristics of individual techniques, which allow making statements on the suitability of particular techniques as well as on the possibilities to combine different techniques. As a consequence, we introduce a 3-step approach. The 3-step approach helps to first classify the quality techniques, then select them, and it finally shows how to integrate them into a consistent “roadmap”. Our 3-step approach uses the schema of method comparison (see comparisons in Olle et al. 1983) and complements it by the integration of techniques, which is the last phase of our 3-step approach. 1. Identification of Appropriate Approaches and Classification of Quality Techniques (Classification) The starting point of the investigation is a compilation of different quality techniques, which may (potentially) be used in a process improvement project.
366
F. Johannsen et al.
To keep the scope of techniques manageable (a total number of 93 techniques were compiled), they are transferred into a standardized structure. This structure is based on a classification approach appropriate to deal with the problem in question and simplifies the subsequent steps of selection and integration. In doing so, not all techniques have to be examined at the same time, but the user can focus on clusters (see Sect. 4). 2. Identification of Appropriate Criteria and Selection of Techniques (Selection) Further down, starting points are identified, which are adequate to evaluate the techniques. In doing so, specific requirements of the particular enterprise have to be considered (e.g., it is required that techniques can be quickly explained and almost instantly used in workshops). To be able to consider these requirements, selection criteria (e.g., a technique must be easy to learn and it should be possible to use it after a short period of familiarization) must be derived and prioritized before they can serve as a basis for the selection of the techniques. At the same time, possible interactions and interdependencies have to be identified. For instance, the degree of complexity of individual techniques has to be adapted to the circle of users addressed in each case. To support a structured way of choosing the selection criteria, we used the approach of the technology acceptance model (TAM). 3. Integration of Techniques into a Coordinated Approach (Integration) Finally, the selected techniques are integrated to form a consistent approach or roadmap for an (quality) improvement initiative. The 3-step approach supports the selection and integration of Six Sigma techniques. In doing so, it primarily offers criteria for the classification and selection as well as restrictions for the integration. The 3-step approach explicitly avoids the prioritization of the criteria and restrictions. Since a prioritization is only possible for a particular case of application, the 3-step approach contains nonweighted criteria and restrictions. As a starting point and a basis for the 3-step approach, we collected Six Sigma techniques from theoretical and practical sources, mainly from literature. Due to the immense scope of quality techniques, they are not explicitly described in this chapter. The listing of techniques is made on the basis of an extensive literature research. Figure 1 shows some of the techniques found.
3.1
Classifying Approaches for Quality Techniques
Different approaches for classifying quality techniques can be found in literature: l
Gogoll and Theden (1994), who take a manufacturing view, classify according to “classical quality supporting tasks”, “organizational measures”, “quality techniques in the broader sense (auxiliary techniques)”, and “quality techniques in the narrow sense”.
Implementing Six Sigma for Improving Business Processes at an Automotive Bank
367
Fig. 1 Extract from list of compiled quality techniques l
l
l
l
1
According to that scheme, Okes (2002) considers only the last two of the above categories in his subcategorization. Here, the “seven elementary quality techniques” (7Q) according to Ishikawa (1980) and the “seven management techniques” (7M) according to Nayatani (1986) can be found again, which, according to Gogoll and Theden (1994), have to be allocated to the quality techniques in the narrow sense.1 Correspondingly, (Okes 2002) creativity techniques, statistical techniques, design techniques, and measurement techniques have to be assigned to the “quality techniques in the broader sense”. Apart from the “7Q” and “7M techniques” categories, Dale and McQuater (1998) allocate quality techniques to the generic classes “other techniques” and “techniques”. Particularly in the context of Six Sigma, the 7 7 technique box has established itself, which subsumes common quality techniques under the categories management techniques, quality control techniques, customer techniques, lean techniques, project techniques, statistical techniques, and design techniques (Magnusson et al. 2004). The first two classes are congruent with the above so-called “7M” or “7Q” techniques, while the remaining categories comprise techniques that can be categorized as auxiliary techniques, according to Gogoll and Theden (1994). Furthermore, there are works that make classifications according to the steps of specific quality management approaches, e.g., the Six Sigma cycle (Roenpage et al. 2006) or the seven steps according to Juran and Gryna (1988).
Basically in literature for “7Q” and “7M” the notion “tool” is established, speaking of “seven elementary quality tools” (7Q) and the “seven management tools” (7M). But we do not distinguish and use the term “technique” only.
368
F. Johannsen et al.
In summary, it shows that the above classification approaches not only follow the proposed roles of the techniques, e.g., communication and illustration of information (“7M” and “management techniques”) (Dale and Shaw 1999) or the individual character of the technique (i.e., whether it leads to an actual result or whether it helps to obtain it) but also follow the procedures of specific quality management concepts (Roenpage et al. 2006; Juran and Gryna 1988).
3.2
Selection Criteria for Quality Techniques
The next question is about the criteria, which support an adequate selection of the quality techniques. Even though Dale and McQuater (1998) argue that the techniques in quality management can principally be qualified as being equivalent (Dale and McQuater 1998), it may be objected that the adequacy of a technique as well as of their characteristics depends on the context of application. That being said, it is generally difficult to forecast which quality techniques can best be used for quality initiatives since it is very difficult to verify their actual influence on obtaining the intended performance level (Tari and Sabater 2003). For classifying the criteria, we use the framework of TAM (technology acceptance model) by Davis (1986, 1989) and Davis et al. (1989). As the constructs of TAM are sufficiently general, they can also be translated to other domains (Moody 2003). TAM describes how users come to accept and use a technology. It suggests a number of factors that influence the acceptance and usage of technologies. All influence factors are classified into three main categories: external variables, perceived usefulness, and perceived ease of use. Transferred to the domain of selecting techniques, the perceived usefulness depends upon whether the user believes that the technique is adequate to support the goals or milestones of the Six Sigma initiative and enhances his or her job performance. The perceived ease of use depends on technique-specific criteria and expresses the user’s belief that using a particular system would be free from effort. The external variables comprise all other criteria, which influence the perceived usefulness and ease of use of techniques used in the project. To be able to select adequate techniques, the three main categories must be substantiated in more detailed criteria. TAM suggests criteria for the acceptance and usage of technologies, which should be used several times. Six Sigma techniques are selected for the use in only one project subsequent. Even though it is possible that subsequent Six Sigma initiatives (re)use the (same) techniques, users choose a suitable technique in accordance to the requirements of only the next initiative. Since the criteria for the ease of use and usefulness differ depending on whether a unique or repeated use is assumed, we were looking for detailed criteria in the Six Sigma literature. Thia et al. (2005) identify 13 parameters to select techniques (when developing new products), which can be subdivided into external and internal parameters. Among the internal parameters count “user friendliness”, the “(non)-tangible benefit
Implementing Six Sigma for Improving Business Processes at an Automotive Bank
369
of the application”, the “aspect of time (application, learnability)”, “monetary costs occurring (for the application)”, the “flexibility (degree of freedom of the application)”, and the “familiarity” with the technique. Among the external parameters count the “degree of novelty of the project”, the “support of the management”, the “cohesiveness”, the “technical competence”, the “size of the enterprise”, the “line of business”, and the “cultural background” (Thia et al. 2005). Thus the external parameters help to include characteristics of the project as well as the enterprise environment into the selection process. Apart from parameters that directly refer to techniques (such as restrictions, difficulties, expected benefit, training time (and effort), etc.), (Dale and McQuater 1998), too, list as well higher order parameters such as the organizational environment, the corporate culture, and the integration of further techniques (Dale and McQuater 1998). Authors like Harrington (1995) emphasize the importance of the level of maturity of an enterprise in quality management when looking at the selection of techniques; in doing so, parallels with the parameter “technical competence” according to Thia et al. (2005) become obvious. Bunney and Dale (1997) report similar experiences in their long-term study of the chemical industry. McQuater et al. (1995) propose the categories “tangibility”, “importance for staff”, “relevance”, as well as “frequency of use” by means of which the application of quality techniques in practice can be evaluated. Bamford and Greatbanks (2005) describe a generic procedure for the execution of quality initiatives in different lines of business, which is heavily based on the phases of the DMAIC cycle; depending on the partial results, which are supposed to be obtained as well as on the situation, the selection of techniques is made from “7Q” or “7M” techniques. Shamsuddin and Masjuki (2003) point out the necessity of a systematic application of techniques, depending on the intended aim of the individual operational phase. The following Table 2 gives a summary of the above mentioned criteria. To sum up, the literature reviewed names criteria that directly address the characteristics of a technique (e.g., learnability, flexibility, etc.), which can represent the perceived ease of use and higher order parameters referring to the specific project periphery, correspond to the perceived usefulness and the enterprise reality (e.g., resources), and correspond to the external variables.
3.3
Requirements on the Integration of Quality Techniques
In quality management, techniques must not be regarded in an isolated manner (Hellsten and Klefsjo¨ 2000) but must be integrated to fulfill given quality objectives (e.g., reducing waiting times or waste of money) (Shamsuddin and Masjuki 2003). It is thus necessary that the selected techniques, both in a specific phase of the cycle and across the phases, complement one another and are based on each other (Snee and Hoerl 2003). Similar considerations are addressed by Bruhn (2006) as well who describes the interdependencies between quality management differentiating between functional, temporal, and hierarchic interdependencies. The functional
370
F. Johannsen et al.
Table 2 Selection criteria for techniques Constructs of Selection criteria TAM External Size of the enterprise variables Line of business Cultural background Organizational environment Corporate culture Usefulness (Non)-tangible benefit of the application Monetary costs occurring (for the application) Flexibility (degree of freedom of the application) Degree of novelty of the project Support of the management Cohesiveness Integration of further techniques Importance for staff Relevance Frequency of use Depending on the partial results which are supposed to be obtained as well as on the situation, the selection of techniques is made from “7Q” or “7M” techniques Systematic application of techniques and techniques, depending on the intended aim of the individual operational phase Ease of use Technical competence
User friendliness Aspect of time (application, learnability) Familiarity with the technique Tangibility
Author(s) Thia et al. (2005)
Dale and McQuater (1998) Thia et al. (2005)
Dale and McQuater (1998) McQuater et al. (1995)
Bamford and Greatbanks (2005)
Shamsuddin and Masjuki (2003) Thia et al. (2005), Harrington (1995), Bunney and Dale (1997) Thia et al. (2005)
McQuater et al. (1995)
interdependencies address contents synergies between techniques to obtain a common goal (Bruhn 2006). Techniques can compete with one another (for instance as regards their mode of action), complement each other, require the application of other techniques, achieve identical results for a problem, or work entirely independently of each other. As regards the parameter time, techniques can be applied successively, parallelly or intermittently. Furthermore, techniques can be classified according to their application, and focus on either strategic or operational problems (hierarchical interdependencies) (Bruhn 2006).
3.4
Summary of the 3-Step Approach
The 3-step approach is summarized in Fig. 2. Based on the description of the technique and the milestones and deliverables of the project, the techniques can
Implementing Six Sigma for Improving Business Processes at an Automotive Bank
371
Fig. 2 Summary of the 3-step approach
be classified according to the classification criteria. This allows a quick selection of the technique according to a certain stage in the project. To be able to select the adequate technique for a certain type of project members, it is useful to declare certain criteria for the application of the technique. Depending on the needs and milestones during the project, the appropriate technique can be selected then. Besides the integration criteria are a helpful mean to notice the dependencies between the techniques and to use the techniques in a useful order. How this 3-step approach was adapted for the automotive bank will be described in the following chapter.
4 Application of the Developed Approach at an Automotive Bank The 3-step-approach was applied in a cooperation project with an automotive bank. It is the affiliate of a German automotive group and is responsible for the activities of the group’s division concentrating on financial services in Germany. Founded in 1971, it belongs to the leading automotive banks in Germany and was (at the time of the project) represented in 53 countries with 26 subsidiaries and 27 cooperations. From the central headquarters, about 760 employees took care of more than 800,000 customers. The automotive bank has no branch network. Its portfolio comprises individual solutions to ensure the mobility of private and business clients, as well as financing and leasing, car insurance, dealer financing, and fleet management. 62% of all buyers of new cars finance the purchase by means of credit or leasing contracts at the car manufacturer’s in-house bank (automotive bank). In the long term, the automotive bank intended to implement Six Sigma as an integrated quality management approach. According to the introduced 3-step
372
F. Johannsen et al.
approach, the quality techniques were first classified to simplify the subsequent selection, and integration. Finally, criteria had to be identified to be able to carry out a substantiated selection. For this purpose, the compilation of criteria was discussed with the project team and questioned regarding the importance of individual parameters. At the same time, selected staff was interviewed to determine requirements on the techniques to enable the derivation of selection criteria. On this basis, individual techniques were evaluated, selected and, finally integrated. The underlying approach is generally applicable, being comparatively generic. Thus, the steps ((1) classification, (2) selection, (3) integration) can be adapted to the specific environment of the enterprise or the project. Therefore, the following subsection describes the basis for the classification, the selection criteria, and the requirements of integration that were used in the automotive bank project. Afterwards, the results obtained will be laid down.
4.1
Classification of Quality Techniques at the Automotive Bank
The project manager decided at the beginning that the systematic implementation of quality techniques had to adhere strictly to the phase results of the Six Sigma cycle. Therefore, a structuring approach based on the DMAIC-cycle was selected. Those quality techniques were allocated to each phase of the cycle that led directly to the intended phase results or supported their development (see Table 1). To keep the classification clear, clusters were supposed to be used to clarify the allocation of individual techniques to specific phases of the cycle (compare Fig. 3). The classification results are shown in Table 3. Due to the tremendous number of techniques, the table comprises only a subset of the classified techniques (for a brief explanation of some of the listed techniques (Conger 2010). When carrying out the selection later on, it was possible to regard each phase separately thus keeping the number of techniques to be evaluated manageable. In doing so, the basis was created for the subsequent integration (across the phases) of the selected techniques within the framework of the DMAIC-cycle. Classification in the Project Classification of techniques by means of the DMAIC cycle
Auxiliary Instruments Applied
Technique 1
Technique 2
Define
Technique 1
Technique 3
1) Starting point: determination of the results to be obtained in each phase
Fig. 3 Classification of techniques
Technique 5
Technique 4 Technique 5 Measure
Technique 6
Technique 4
Technique 8 Technique 7
2) Allocation of techniques which directly lead to the phase results or support their being obtained
Technique 2
... ...
Technique 3
Technique 8
Implementing Six Sigma for Improving Business Processes at an Automotive Bank
373
Table 3 Classification results Phase Techniques Define Project charter, CTQ/CTB matrix, stakeholder analysis, SIPOC, process flow diagram/ process map, customer segmentation, structured interviews, KANO . . . Measure Capability analysis, performance metrics (DPMO, DPU, . . .), check sheets, value matrix, data collection plan, trend/run chart, dot plot diagram, box plot diagram, gage repeatability and reproducibility, . . . Analyze Cause–effect diagram, histogram, FMEA, scatter diagram, regression analysis, hypothesis testing, correlation calculation, pareto diagram, multivariate charts,process flow diagram/process map, design of experiments, process simulation, 5S, value stream map, . . . Improve Brainstorming, affinity diagram, priority matrix, cost benefit analysis, network planning technique, brainwriting, anti-brainstorming, Poka Yoke, TOC, etc. Control Control charts, reaction/control plan, mistake proofing/automated control, etc.
4.2
Selection of the Classified Quality Techniques at the Automotive Bank
At the automotive bank, the “user friendliness” of the techniques as well as the technical, organizational, and temporal restrictions were identified as the most important parameters. Therefore, the selection criteria (see Sect. 3.2) were discussed within the project team. In addition, staff interviews were carried out to identify those criteria that employees at the automotive bank considered to be the most significant for selecting quality techniques. Based on the discussion and the interviews, the criteria were prioritized. In the following, only those criteria are focused on that considered to be the most important ones, namely “user friendliness” and the restrictions listed above. At the automotive bank, technical restrictions referred to existing software packages that were used for purposes of analysis, documentation, and execution of techniques. It was not intended to buy additional software but to draw on existing applications. This had an influence on the mode of data evaluation, on the analysis as well as on the collection of the performance data of adequate measuring systems. Organizational restrictions mostly referred to the implementation of the improvement initiative. The phase results of the project were supposed to be worked out in workshops across the divisions, which were joined by staff in charge. To proceed in this way has the advantage of integrating all the staff involved in the exchange of experiences: this is one major factor of success when implementing quality techniques (McQuater et al. 1995; Bunney and Dale 1997). It is, however, only possible to tap the full potential if all project members cooperate. This requires that all participants, irrespective of their actual knowledge of techniques and quality management methods, understand the techniques applied in the workshop and are able to work with them. Thus the way the workshop works has an essential influence on the criterion “user friendliness” described later on in this chapter. Moreover, it must be pointed out that not all techniques can be used in project work.
374
F. Johannsen et al.
Auxiliary Instruments Used
Selection Criteria in the Project
Supporting application
Venue
Technique 1
Application 3
Workshop
Technique 2
Application 1
Workshop
Technique 3
Application 1
Workshop
Technique 4
Application 2
Workshop
...
...
Restrictions 1) Technical restrictions (software pack ages...): draw back on existing infrastructure 2) Organizational restrictions: application in workshop
...
3) Temporal restrictions: narrow time frame to work out project results and direct application of the instrument in the process initiatives Iinfluence on
User Friendliness 1) Ease of learning: of techniques
2) Handling: easy, flexible handling of techniques
j i
Ease of learning
Handling (flexibility)
weight g1= 4
weight g2 =5
Points (P)= pi1*g1+pi2 *g2
Technique 1
8
9
77
Technique 2
4
5
41
Technique 3
3
7
47
Technique 4
9
3
51
...
...
...
...
Fig. 4 Selection of techniques
For instance, the analysis of performance data should not be done in the workshop, since it may be necessary to provide further datasets, something that will only become obvious during the process of analysis. To evaluate the techniques against the background of technical and organizational restrictions, a matrix was used (see Fig. 4). Column 1 shows for each technique which supporting application was available for the implementation, the results documentation, as well as for the subsequent electronic processing of the results (verification of the technical restrictions). Techniques that did not have any software or system support were not considered. The second column shows the appropriate venue. The bulk of the techniques was supposed to be implemented in workshops across the divisions; only data collections and analyses were supposed to be done outside these workshops (mainly during the Analyze and Control phase). In doing so, details for the subsequent organization of the improvement initiative were obtained since it became obvious which steps had to be worked on together and which were to be dealt with separately (organizational restrictions). Temporal restrictions are the third form of restrictions. On the one hand, they referred to the training period needed for learning specific techniques, on the other hand, they affected the tight schedule to produce presentable results. The techniques had to be easy to learn and it had to be possible to compile results in relatively short time. These requirements had an influence on the criterion “user friendliness” (see Fig. 4). To provide results fairly rapidly, it was decided to only use those techniques for the subsequent integration, which either led directly, or by
Implementing Six Sigma for Improving Business Processes at an Automotive Bank
375
combining them with as few as possible further techniques, to the intended phase results. To account for these interdependencies, the temporal restrictions will be considered under the criterion “user friendliness” and the subsequent integration (see Sect. 4.3). The criterion “user friendliness” referred directly to the quality techniques to be applied. Two essential characteristics that add to the user friendliness of a technique were dealt with, namely ease of learning and easy handling (Thia et al. 2005). As has been mentioned above, the time needed to learn the techniques was supposed to be as short as possible. Easy handling was supposed to ensure that the techniques could be adapted to the needs of the users. To evaluate the techniques, they were compared with the criteria “ease of learning” and “easy handling” (see Fig. 4). Both criteria were weighted. At the automotive bank, the project team ranked the last point a little higher than the “ease of learning” of the technique. Afterward, the techniques were evaluated on the basis of the two above criteria. This evaluation resulted in differing expectations as regarded the line totals, which were calculated taking into account the weightings (depending on the intended venue). While techniques to be used in workshops were supposed to be easy and intuitive to learn, this was also intended for techniques to be used for data collection and analysis; however, for the final selection, the criterion data quality (which at the time could merely be estimated) was of higher importance. Eventually, the following techniques were selected: l l l
l l
Define: project charter, CTQ/CTB matrix, SIPOC. Measure: data collection plan, dot plot diagram, box plot diagram. Analyze: cause–effect diagram, histograms, scatter diagrams, correlation calculation. Improve: brainstorming, affinity diagram, priority matrix. Control: reaction/control plan, control charts.
4.3
Integration of the Selected Quality Techniques at the Automotive Bank
To obtain a consistent roadmap according to the Six Sigma cycle, the techniques were supposed to be combined expediently, both within a DMAIC phase and across the phases. Having said that, staff interviews were held to find out which interdependencies between the techniques were necessary. For the category of functional interdependencies, conditional and complementary relationships, in particular, were seen as being essential. On the one hand, the selected techniques were supposed to support each other as to their effects, and on the other, the number of techniques to be applied had to be manageable, which automatically leads to cause–effect interdependencies between techniques that make a combined application necessary. For instance, doing data analyses does not make sense if a data collection plan has not been worked out and if project-oriented performance data
376
F. Johannsen et al.
Integration in the Project Across the phases and phase-related integration of the techniques
1) Functional interdependencies: conditional, complementary
Auxiliary Instruments Used Define
VOC/CTQ Matrix
SIPOC
Interviews
...
Measure
Data collection plan
MSA
Value matrix
...
Analyze
FMEA
5S
Ishikawa
...
Improve
Brainstorming
N/3 Method
AntiBrainstorming
...
Control
ControlCharts
Reaction plan
Cp/Cpk calculation
...
2) Temporal interdependencies: successive
3) Hierarchical interdependencies: operational
Fig. 5 Integration of techniques
have not been collected beforehand. In view of the temporal criterion, a successive application of the techniques had been intended. At the same time, merely one quality technique was supposed to be applied. In hierarchic terms (Bruhn 2006), the techniques applied were supposed to have a predominantly operational character. Strategic importance was only to be attributed to the previously made project selection. Alternative possibilities of combining the techniques across all phases of the Six Sigma cycle were supposed to be demonstrated by means of a morphological box with combinations also being allowed within a line (meaning within a cycle phase) (see Fig. 5). The main focus of attention was on the mutual support as well as on the operational sequence of the techniques. The combination of the techniques, under consideration of the above written inter-dependencies, revealed several options that made a final decision necessary. The final decision was up to the project management. The project management constituted eventually the following sequence of tools for the initial Six Sigma initiative. l
l
l
Define: The Define-Phase started with the SIPOC diagram to get a visual representation of the business process. Afterward, the CTQ/CTB matrix was used to structure the requirements of internal and external customers. Furthermore, these requirements were transformed into measurable characteristics of the business process (CTQs and CTBs). Organizational matters (team members, milestones, etc.) were determined by means of a project charter. Measure: In the Measure-Phase, data collection plans were established first to get a clear picture of the data needed for determining the performance level of the business process. The data gathered was then visualized by the help of dot plot and box plot diagrams. Analyze: To identify root causes for failure, cause and effect diagrams were used. In addition, process data (when available) was analyzed in more detail by means of correlation calculation. The results were then communicated by histograms and scatter diagrams.
Implementing Six Sigma for Improving Business Processes at an Automotive Bank l
l
377
Improve: To eliminate root causes for failures, brainstorming was performed to find solutions. The solutions proposed were structured by means of affinity diagrams and prioritized by using the priority matrix. Control: Control charts are used to control performance levels of the business process continuously. In the reaction plan (respectively control plan), arrangements are described if significant deviations in process performance occur.
For internal training purposes of the techniques, a global intranet portal was designed, which, apart from guidelines, descriptions, and general support, also offered templates for the application and documentation of results.
4.4
Benefits of the 3-Step Approach
The 3-step approach comprises a generic structure, which is applied only once at the beginning of a Six Sigma initiative and supports the selection and integration of appropriate techniques. The selection considered all individual requirements of the automotive bank. Since the users were integrated in the decision process, the acceptance of the techniques was given. Moreover, users fully understood the techniques and used its full potential. The 3-step approach was completely adopted and subsequent projects were using the 3-step approach in order to select and integrate adequate techniques. All in all, five Six Sigma projects were conducted from April 2006 to November 2007. The investigation was carried out in each project by four experienced Six Sigma users working full-time. In addition, approximately 10–30 employees from the operating departments supported each project working part-time, mostly in workshops. In addition, project improvements underline that users of the automotive bank selected and integrated based on the 3-step approach appropriate techniques. The five projects achieved multifold short-term as well as long-term improvements. Short-term improvements that could be implemented immediately included, for instance, the restructuring of forms and the simplification of sorting procedures. Long-term improvements focused on the reduction of media breaks and cycle times. Altogether, the projects achieved tremendous monetary benefits.
5 Lessons Learnt Several lessons can be learnt from the project. On the one hand, these refer to the application of the 3-step approach for selecting and integrating quality techniques; on the other hand, a couple of insights can be derived from actually working on Six Sigma initiatives within the automotive bank.
378
F. Johannsen et al.
Considering the application of the 3-step approach for the selection and integration of quality techniques, the following experiences have been made: l
l
l
During step 1 of our approach (classification), it became obvious that the exact allocation of individual techniques to a certain phase was not always possible. For instance, cause-and-effect diagrams (Ishikawa 1980) could both be applied in the Analyze phase – to collect potential causes for problems – and in the Measure phase – to restrict performance metrics. In these cases, techniques were allocated to all possible cycle phases. The selection of the techniques was done by the responsible project team. It is advisable that the selection process (step 2 of our approach) is done by the same persons for all techniques. Otherwise, the selection results may not be commensurable. As a supporting measure, short profiles were used, which for each technique listed advantages and disadvantages, functioning, and intended use. This proved to be very helpful in evaluating the techniques. The application of possible techniques for data analysis was intensively discussed. Since some of the operating departments did not have access to statistics software, the sample of usable techniques was restricted. It was necessary to find out which technique could be used with the existing applications and with which technique project members could work out the required results. In addition, possible quality losses had to be detected. The final decision was up to the project management.
Furthermore, several lessons can be learnt from the Six Sigma initiative themselves. These lessons can be divided into two groups: those which concern the project progress and project preparation and those which concern the phases of the Six Sigma cycle. Regarding the project progress, it turned out to be useful to divide the project into four blocks (see Fig. 6): l
l l
l
A workshop where the phases “define” and “measure” of the Six Sigma cycle were discussed forms the first block. The second block deals with gathering data and analyzing it. In the third block, a second workshop takes place where the results of the analysis are presented and suggestions are made for improvement. The last block then deals with controlling the improved process.
Regarding the project preparation and the different phases of the Six Sigma cycle, the following points in Fig. 7 may be helpful to keep in mind when performing a Six Sigma initiative.
Fig. 6 Main blocks of project progress
Implementing Six Sigma for Improving Business Processes at an Automotive Bank
379
Fig. 7 Lessons learnt
6 Conclusions This chapter starts with the problems of selecting and integrating adequate quality techniques from a great number of existing quality techniques. Each technique has its own advantages and can make its own contribution to the Six Sigma initiative. In addition, the integration of the selected techniques has to meet different requirements to avoid interdependencies and to obtain a consistent roadmap for the project. These problems were supposed to be solved when doing a prototypic implementation of Six Sigma at an Automotive Bank. For this purpose, a generic 3-step approach was developed, adapted to the needs of the automotive bank, and afterwards implemented. In doing so, the design of the second phase (selection) and the third phase (integration), in particular, was strongly shaped by the needs and demands of the staff. The technical restriction (draw back on existing infrastructure) and the organizational restriction (phase results should be worked out in workshops) in the second phase are examples for that. Having said that, it may well be expected that variations will occur where other enterprises are concerned, since, so far, there is a lack of generally valid guidelines and instructions; thus the adaptation to the individual environment will be necessary in any new case. The 3-step approach was applied in a cooperation project with the automotive bank and has not yet been subjected to a broad evaluation at different service enterprises or
380
F. Johannsen et al.
financial service providers. For even though convincing results were obtained in this project (see Sect. 4.4) and substantiate not only the feasibility but also that the five Six Sigma projects could achieve several benefits. It is, at present, not possible to make any final statement as to whether the approach can be transferred to other projects. Nonetheless, the 3-step approach introduced in this chapter seems to be promising as a starting point for project-specific extensions and modifications. Apart from the above, the relevant literature deals with further problems regarding the Six Sigma application and implementation in services, which often occur in similar process initiatives. These problems were not referred to in this chapter since the focus was explicitly on higher order aspects that have to be addressed at the beginning of any Six Sigma initiative.
References Akao Y (1990) QFD: integrating customer requirements into product design. Productivity Press, Cambridge, MA Antony J (2004) Six Sigma in the UK service organizations: results from a pilot survey. Manage Audit J 19(8):1006–1013 Antony J (2006) Six sigma for service processes. Bus Process Manage J 12(2):234–248 Arneson T, Rys M, McCahon C (1996) A guide to the selection of appropriate quality improvement tools. In: Chen J and Mital A (eds) Proceeding of the 1st annual international conference on industrial engineering applications and practice. Houston Bamford D, Greatbanks R (2005) The use of quality management tools and techniques: a study of application in everyday situations. Int J Qual Reliab Manage 22(4):376–392 Baumoel V (2010) Cultural change in process management. In: vom Brocke J, Rosemann M (eds) Handbook on business process management, vol 2. Springer, Heidelberg Breyfogle F (2003) Implementing Six Sigma. Smarter solutions using statistical methods. Wiley, Hoboken, NJ Breyfogle F, Cupello J, Meadows B (2001) Managing Six Sigma. Wiley-Interscience, New York Bruhn M (2006) Qualit€atsmanagement f€ ur Dienstleistungen, 6th edn. Springer, Berlin Bunney HS, Dale BG (1997) The implementation of quality management tools and techniques: a study. TQM Mag 9(3):183–189 Chakrabarty A, Tan KC (2007) The current state of six sigma application in services. Manag Serv Qual 17(2):194–208 Conger S (2010) Six Sigma and Business Process Management. In: vom Brocke J, Rosemann M (eds) Handbook on Business Process Management 1, Springer, Heidelberg, pp 129–150 Crosby PB (1979) Quality is free, the art of making quality certain. Hodder & Stoughton, New York Dale BG, McQuater R (1998) Managing business improvement & quality: implementing key tools and techniques. Blackwell Business, Oxford Dale BG, Shaw P (1999) Tools and techniques: an overview. In: Dale BG (ed) Managing quality. Blackwell Business, Malden, pp 280–314 Davis FD (1986) A technology acceptance model for empirically testing new end-user information systems: theory and results. Sloan School of Management, Massachusetts Institute of Technology, Cambridge, MA Davis FD (1989) Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Q 13(3):319–340 Davis FD, Bagozzi RP, Warshaw PR (1989) User acceptance of computer technology: a comparison of two theoretical models. Manage Sci 35(8):982–1003
Implementing Six Sigma for Improving Business Processes at an Automotive Bank
381
Deming WE (1982) Quality, productivity and competitive position. MIT Center for Advanced Engineering, MIT Center for Advanced Engineering, Cambridge, MA Feigenbaum AV (1991) Total quality control. McGraw-Hill, New York Foley K (2004) Five essays on quality management – presented in honour of homer Sarasohn. Standards Australia International Ltd., Sydney, Australia Gogoll A, Theden PH (1994) Techniken des quality engineering. In: Kamiske GF (ed) Die hohe Schule des total quality management. Springer, Berlin/Heidelberg, pp 329–369 Harmon P (2007) Business process change: a guide for business managers and BPM and Six Sigma professionals. Elsevier LTD, Oxford Harrington HJ (1995) An international view of what works and what doesn’t work. In: American Society of Quality Control (ed) Proceedings of the 49th annual quality congress, Cincinnati, OH Harry M, Schroeder R (2000) Six Sigma: the breakthrough management strategy revolutionizing the World’s top corporations. Currency, New York Harry M, Schroeder R (2006) Six Sigma: the breakthrough management strategy revolutionizing the World’s top corporations. Doubleday, New York, NY Hellsten U, Klefsjo¨ B (2000) TQM as a management system consisting of values, techniques and tools. TQM Mag 12(4):238–244 Hensley R, Dobie K (2005) Assessing readiness for six sigma in a service setting. Manag Serv Qual 15(1):82–101 Ishikawa K (1980) Guide to quality control. ASIAN PRODUCTIVITY ORGANIZATION, Tokyo Ishikawa K (1985) What is total quality control? The Japanese way. Prentice-Hall, London Juran JM (1988) On planning for quality. Collier Macmillan, London Juran JM, Gryna FM (1988) Juran’s quality control handbook. McGraw-Hill Education, New York Kwok KY, Tummala VMR (1998) A quality control and improvement system based on the total control methodology (TCM). Int J Qual Reliab Manage 15(1):13–48 Leist S, Zellner G (2006) Evaluation of current architecture frameworks. In: Haddad HM, Chbeir R, Wainwright RL, Liebrock LM, Palakal M, Yetongnon K, Nicolle C (eds) 2006 ACM symposium on applied computing (SAC). Bourgogne University, Dijon, France, pp 1546–1553 Magnusson K, Kroslid D, Bergman B (2004) Six Sigma umsetzen. Hanser, M€ unchen/Wien McQuater RE, Scurr CH, Dale BG, Hillmann PG (1995) Using quality tools and techniques successfully. TQM Mag 7(6):37–42 Moody DL (2003) The method evaluation model: a theoretical model for validating information systems design methods. In: Ciborra C, Mercurio R, De Marco M, Martinez M, Carignani A (eds) Proceedings of the 11th European conference on information systems, ECIS 2003. Naples, Italy Nayatani Y (1986) Seven Management Tools for QC. Rep Stat Appl Res JUSE 33(2):1–6 Okes D (2002) Organize your quality tool belt. Qual Prog 35(7):25–29 Olle TW, Sol HG, Tully CJ (1983) Information systems design methodologies: a feature analysis. In Olle TW, Sol HG, Tully CJ (eds): Proceedings of the IFIP WG 8.1 working conference on feature analysis of information systems design methodologies. York, UK Pande P, Neumann R, Cavanagh R (2000) The Six Sigma way – how GE, Motorola and other top companies are honing their performance. Mc Graw Hill, New York Roenpage O, Staudter C, Meran R, Johan A, Beernaert C (2006) Six Sigma + Lean Toolset. Springer, Berlin Shamsuddin A, Masjuki H (2003) Survey and case investigations on application of quality management tools and techniques in SMIs. Int J Qual Reliab Manage 20(7):795–826 Smith AK, Bolton RN, Wagner J (1999) A model of customer satisfaction with service encounters involving failure and recovery. J Mark Res 36:356–372 Snee RD (2004) Six sigma: the evolution of 100 years of business improvement methodology. IJSSCA 1(1):4–20 Snee R, Hoerl R (2003) Leading Six Sigma. Prentice Hall, New York
382
F. Johannsen et al.
Tari JJ, Sabater V (2003) Quality tools and techniques: are they necessary for quality management? Int J Prod Econ 92(3):267–280 Theden P (1996) Beschreibung ausgew€ahlter Qualit€atstechniken. In: Kamiske GF (ed) Digitale Fachbibliothek Qualit€atsmanagement: Methoden – Praxisbeispiele – Hintergr€ unde. Symposion Publishing, D€usseldorf, pp 1–13 Thia C, Chai KH, Bauly J, Xin Y (2005) An exploratory study of the use of quality tools and techniques in product development. TQM Mag 17(5):406–424 vom Brocke J, Petry M, Sinnl T, Østerberg Kristensen B, Sonnenberg C (2010) Global processes and data: the cultural journey at the Hilti Corporation. In: vom Brocke J, Rosemann M (eds) Handbook on business process management, vol 2. Springer, Heidelberg